Working Papers, Department of Economics, Lund University
Christian Bladh and Håkan J. Holm
Can Economics Explain Where All-Inclusive Deals are Offered?
Abstract: This paper investigates why all-inclusive travel packages
are offered at some hotels but not at others. By using the theory of
transaction cost, it is argued that all-inclusive contracts mitigate a
hold-up problem and that the severity of this problem varies with regards
to the hotel’s distance to the resort center. This hypothesis is tested
empirically against data from 3798 hotel offers and is strongly supported.
Additionally, some country-specific mechanisms related to the general price
level and the degree of corruption are analyzed. Countries with all
inclusive offers are characterized by a low price level and high
Keywords: All-inclusive; contracts; hold-up; transaction cost; tourism; (follow links to similar papers)
JEL-Codes: D23; D86; L14; L83; (follow links to similar papers)
17 pages, January 30, 2012
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